8-K: TMC the metals company Inc. Announces $37 Million Registered Direct Offering to Advance Deep-Sea Mining Initiatives

TMC the metals company Inc. secures $37 million in a registered direct offering to bolster its U.S. regulatory pathway for deep-sea polymetallic nodule commercial production.

Summary

• TMC the metals company Inc. has entered into a securities purchase agreement for a registered direct offering expected to generate approximately $37 million in gross proceeds.
• The offering includes 12,333,333 common shares and Class C warrants to purchase an equal number of common shares, priced at $3.00 per share and accompanying warrant.
• The Class C warrants have an exercise price of $4.50 per share and expire three years from the agreement date.
• The company plans to use the proceeds for working capital and general corporate purposes.
• TMC is focusing on a U.S. regulatory pathway under the Deep Seabed Hard Mineral Resources Act (DSHMRA) for commercial production of deep-sea polymetallic nodules.
• TMC USA, a wholly-owned subsidiary, has submitted exploration license applications covering 199,895 square kilometers and a commercial recovery permit application covering 25,160 square kilometers in the Clarion Clipperton Zone (CCZ).
• These areas are estimated to hold 1.635 billion wet tonnes of mineral resources, including 15.5 million tonnes of nickel, 12.8 million tonnes of copper, 2.0 million tonnes of cobalt, and 345 million tonnes of manganese.
• The company is also preserving its rights under International Seabed Authority (ISA) contracts.
• As of March 31, 2025, the company had an estimated $2.3 million in cash on hand and $10 million in short-term debt.
• Operating expenses for the three months ended March 31, 2025, were approximately $18.0 million, with an operating loss of $20.6 million and net cash used in operating activities of $9.3 million.
• The company had $19.3 million available under its At-the-Market Equity Distribution Agreement, having raised $5.7 million in the three months ended March 31, 2025, at an average price of $1.93 per share.

Sentiment

Score: 5

Explanation: The announcement is mixed. The capital raise is positive, but the company's financial position and the regulatory uncertainties surrounding deep-sea mining temper the outlook.

Positives

• The $37 million capital injection will provide working capital for the company.
• Focusing on the U.S. regulatory pathway under DSHMRA could provide a more direct route to commercial production.
• The company maintains strategic alliances with Allseas Group S.A. and Glencore International AG.
• The company has developed a near-zero solid waste flowsheet for onshore processing facilities.
• The company has a binding MoU with PAMCO for toll treatment of polymetallic nodules.

Negatives

• The company had only $2.3 million in cash on hand as of March 31, 2025.
• The company reported an operating loss of $20.6 million for the three months ended March 31, 2025.
• The company is still in the exploration phase and has not yet obtained an exploitation contract or a permit for commercial recovery from any regulators.
• The company does not yet hold the environmental or other permits required to construct and operate commercial-scale polymetallic nodule processing and refining facilities on land.

Risks

• The company's ability to satisfy certain conditions to closing the Registered Offering on a timely basis or at all.
• Changes in the company's financial results for the period ended March 31, 2025 from the preliminary unaudited financial information as of and for the three months ended March 31, 2025.
• The outcome of discussions and consultations with NOAA or other U.S. government officials.
• The company's ability to obtain required licenses and permits under DSHMRA or any other applicable U.S. laws or regulations.
• The potential for legal or jurisdictional challenges to the company's rights or proposed operations in international waters.
• Regulatory uncertainties and the impact of government regulation and political instability on the company's activities.
• Environmental risks and liabilities.
• The company's ability to develop sufficient data to support permit applications and satisfy environmental requirements.
• The company's ability to develop minerals in sufficient grade or quantities to justify commercial operations.
• The lack of development of seafloor polymetallic nodule deposit.
• The company's ability to successfully enter into binding agreements with Allseas Group S.A. and other parties in which it is in discussions, if any.
• Uncertainty in the estimates for mineral resource calculations from certain contract areas and for the grade and quality of polymetallic nodule deposits.
• Risks associated with natural hazards.
• Uncertainty with respect to the specialized treatment and processing of polymetallic nodules that the company may recover.
• Risks associated with collective, development and processing operations, including with respect to the development of onshore processing capabilities and capacity and Allseas Group S.A.'s expected development efforts with respect to the Project Zero offshore system.
• The company's dependence on Allseas Group S.A..
• The company's ability to successfully adopt and profitably execute a new business strategy to develop a services business and to optimize and expand its resource portfolio.
• Fluctuations in transportation costs.
• Fluctuations in metals prices.
• Testing and manufacturing of equipment.
• Risks associated with the company's limited operating history, limited cash resources and need for additional financing.
• Risks associated with the company's intellectual property.
• Low Carbon Royalties limited operating history.

Future Outlook

The company intends to use the net proceeds from the sale of the Securities hereunder for working capital, and other general corporate purposes and to repay all or a portion of outstanding indebtedness of the Company.

Industry Context

The announcement reflects a growing interest in deep-sea mining as a source of critical minerals, particularly for battery technologies. The company's focus on the U.S. regulatory pathway aligns with efforts to secure domestic supply chains for these minerals.

Comparison to Industry Standards

• The company's approach to deep-sea mining is unique as it is pursuing a U.S. regulatory pathway while maintaining contracts with the ISA.
• Lockheed Martin also holds exploration licenses in the CCZ, but has not conducted recent offshore activities, citing market conditions and the lack of international recognition of DSHMRA licenses.
• Other companies in the deep-sea mining sector, such as DeepGreen Metals (now TMC), have primarily focused on the ISA regulatory framework.
• The company's strategic alliances with Allseas and Glencore are similar to other partnerships in the industry aimed at developing collection systems and securing offtake agreements.

Related Party Transactions

• As of March 31, 2025, the Company estimates that it had short-term debt of approximately $10 million, representing amounts outstanding under the Unsecured Credit Facility, dated March 22, 2024, as amended, with Gerard Barron, the Company’s Chief Executive Officer and Chairman, and ERAS Capital LLC, the family fund of the Company’s director, Andrei Karkar (the 2024 Credit Facility).

Stakeholder Impact

• Shareholders: The offering will dilute existing shareholders.
• Employees: The capital raise could provide job security.
• Customers: The company's progress in deep-sea mining could lead to a new source of critical minerals.
• Suppliers: The company's operations could create new business opportunities for suppliers.
• Creditors: The company intends to use the net proceeds from the sale of the Securities hereunder for working capital, and other general corporate purposes and to repay all or a portion of outstanding indebtedness of the Company.

Next Steps

• The closing of the Registered Offering is expected to occur on or about May 22, 2025, subject to the satisfaction of customary closing conditions.
• The company will continue to pursue exploration licenses and a commercial recovery permit under DSHMRA.
• The company expects this relationship to progress to a definitive tolling agreement in 2025, subject to successful evaluation study outcomes and agreement to mutually acceptable commercial terms.

Key Dates

Keywords

Deep-sea mining, Polymetallic nodules, DSHMRA, ISA, TMC the metals company, Registered direct offering, Class C warrants, Exploration license, Commercial recovery permit, CCZ